Frequently Asked Questions
What are the advantages of a Whole of Life Plan?
The FSA allows funeral directors to invest money from pre-payment funeral plans into two types of investment: Trust Funds or Whole of Life Assurance policies.
Although Trust Funds are governed by Trust Law and have Independent Trustees, they are not necessarily as secure as insurance company life funds for investing funeral plan-holders’ premiums. The latter are subject to strict rules and regulations in terms of governance and financial reporting. There is also a requirement to hold additional solvency margins over and above the policyholder reserves. Trust Funds have no such requirements.
Trust Funds also suffer from being relatively small and therefore more open to the risks associated with poor investment performance. The Ecclesiastical Life Limited (Ecclesiastical) Whole of Life Policy being used by NAFD Services Limited includes a guaranteed return in line with movements in the 'All Items' UK measure of the Retail Prices Index (RPI) over and above a full guarantee of the sum assured. Investing in a Trust Fund gives no such investment or capital guarantees.
Do I need to guarantee disbursements?
The new Perfect Choice Funeral Plan no longer fully indemnifies plan-holders against the cost of disbursements (payments to third parties outside of the control of funeral directors). Instead it guarantees that the amount set aside to cover disbursements will increase in line with the RPI. We made this change so that NAFD members do not have to bear any additional third-party costs that increase over and above RPI. As you will know, many such costs have risen steeply over the last few years.
What if I still wish to guarantee disbursements?
The Perfect Choice Funeral Plan guarantees to cover the cost of increases in disbursements inline with RPI. If you wish to make a further guarantee to your customers to cover all increases in the cost of disbursements, you may do so. This will not alter the amount you receive on claiming from NAFD Services Limited; you will need to cover any shortfall, as NAFD Services accepts no liability for this. The Perfect Choice Team will be pleased to provide revised text for your Perfect Choice brochures if you wish to guarantee third-party costs for your customers.
